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EUR/USD drops to 1.0670, European stocks off to flying start

FXStreet (Mumbai) - EUR/USD’s recovery from FOMC-minutes-backed downward spike to 1.0617 once again lost steam just shy of hourly 200-SMA, and drops sharply to 1.0670 region.

EUR/USD tests hourly 20-SMA

Currently, the EUR/USD pair trades 0.12% higher at fresh session lows of 1.0670, having faced rejection near 1.0715 area. The main currency pair halted its corrective rally and turned back lower below 1.07 handle, as the greenback recovered more than half its slide against its major competitors.

Moreover, a flying start seen on the European equities brought in renewed optimism in markets as the European traders brush off the recent FOMC minutes and now look forward to the ECB October meeting account.

The major came under renewed selling pressure as the persisting divergent monetary policy outlooks between both continents continue to dampen the sentiment around the euro.

Wednesday’s FOMC minutes reflected that the Fed is on track to raise rates this year, although such a move remains data-dependent. While markets are expecting the ECB minutes to reveal ECB policymakers’ intentions over the probabilities of QE expansion/ deposit rate cut next month.

Nothing of relevance holds for the EUR in terms of macro data this session, hence attention shifts to the US datasets for fresh momentum.

EUR/USD Technical Levels

The pair drops below 1.07 handle, with the immediate support seen at 1.0660 (1h 50-SMA). Selling pressure will intensify below the last, dragging the pair towards 1.0617 (Nov 18 Low). While to the upside the next hurdle in sight is located at 1.0720 (1h 200-SMA) and from there to 1.0780 (Nov 16 High).

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